Hotel Chart of the Week: Extended Stay Boom in U.S. Ramps Up
Key Points
- The U.S. extended-stay hotel pipeline has grown to 44% of supply, increasing by nearly 10% in the past 18 months.
- Major hotel groups like Marriott, Hilton, and Hyatt have recently introduced new extended-stay brands, potentially boosting developer interest.
- Marriott leads in extended stay exposure, but Hilton is well-positioned to capture supply growth with its Home2 brand.
Summary
The extended-stay hotel sector in the U.S. is experiencing significant growth, with its development pipeline now constituting 44% of the total hotel supply, a nearly 10% increase over the past 18 months. This trend is supported by major hotel groups such as Marriott, Hilton, and Hyatt, which have recently launched new extended-stay brands. While Marriott leads in extended stay exposure, Hilton's Home2 brand is poised for substantial supply growth, highlighting the competitive dynamics in this burgeoning market segment.
Enthusiasm for extended-stay hotels seems boundless among U.S. hotel developers. The national extended stay pipeline is now 44% of supply, up by almost 10% in the last 18 months.
Analysts at Bernstein, led by Richard Clarke, produced a chart in a research note on Thursday that captures the trend — using data from STR, the hotel performance benchmarking firm. The chart shows how extended-stay development takes an increasingly large share of the mix of hotel development.
The chart has lagging data. Since October, several hotel groups, including Marriott, Hilton, Hyatt, Wyndham, and BWH (Best Western) have debuted new extended-stay brands. The new options may drive developer interest higher.
Looking ahead, which hotel groups are best-positioned to gain from the tailwinds?
"Marriott leads all asset light groups in extended stay exposure, at more than 15% of their global portfolio and 4.5% ahead of Hilton at number 2 — so naturally stands to gain from demand tailwinds. However, Hilton looks best placed to capture supply growth, with its Home2 brand boasting an impressive relative pipeline of 108% of supply, despite being well established with more than 60,000 rooms."
—Richard Clarke, Niall Mitchelson, and Kate Xiao of Bernstein
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